This is what the Institute of Supply Management said about their ISM manufacturing survey report, whereas last month they were pretty pessimistic, so the survey results must have come as a surprise:

this month's report signals a continuation of the recovery that began 15 months ago, and its strength raises expectations for growth in the balance of the quarter. Survey respondents note the recovery in autos, computers and exports as key drivers of this growth. Concerns about inventory growth are lessened by the improvement in new orders during October. With 14 of 18 industries reporting growth in October, manufacturing continues to outperform the other sectors of the economy."

New orders increased a whopping 7.8 to 58.9% for the October index. In the below St. Louis Fed FRED graph, we see a clear jump on new orders in terms of the rate of change. This is the largest increase since January 2009. That's great!

Below is the ISM table data, notice this month's turn around and despite the fact Q3 GDP was fueled by inventories, those surveyed say customers inventories are too low.

MANUFACTURING AT A GLANCE OCTOBER 2010

Index

Series
Index
October

Series
Index
September

Percentage
Point
Change

Direction

Rate
of
Change

Trend*
(Months)

PMI

56.9

54.4

+2.5

Growing

Faster

15

New Orders

58.9

51.1

+7.8

Growing

Faster

16

Production

62.7

56.5

+6.2

Growing

Faster

17

Employment

57.7

56.5

+1.2

Growing

Faster

11

Supplier Deliveries

51.2

52.3

-1.1

Slowing

Slower

17

Inventories

53.9

55.6

-1.7

Growing

Slower

4

Customers' Inventories

44.0

42.5

+1.5

Too Low

Slower

19

Prices

71.0

70.5

+0.5

Increasing

Faster

16

Backlog of Orders

46.0

46.5

-0.5

Contracting

Faster

2

Exports

60.5

54.5

+6.0

Growing

Faster

16

Imports

51.5

56.5

-5.0

Growing

Slower

14

OVERALL ECONOMY

Growing

Faster

18

Manufacturing Sector

Growing

Faster

15

Hiring decreased to 57.7%, a +1.2% increase. That said, last month was -3.9% lower so we need a few blow outs of this metric.. Below is the ISM manufacturing employment graph so you can see the trend line.

There was also a massive jump in production, 6.2 to 62.7%. That's what we need to see, an increase in manufacturing output.

Exports jumped to 60.5, a 6 percentage point increase while exports dropped 5 percentage points to 51.5. That is going to help the trade deficit. Of course China's PMI also just blew way past expectations, so while U.S. manufacturing breaths some life, China, as usual outputs exponentially.

The ISM neutral point is 50. Above is growth, below is contraction, although the ISM is this report is noting some variance in the individual indexes (see their report). For example, A PMI above 42, over time, also indicates growth.